Co-authored by Carolin Goldbeck
Sports content again!? Just as an opener for a broader topic: As repeatedly discussed on this blog (see, e.g., here and here), antitrust also applies with regard to sport. This is also true for professional football clubs, even though they are usually somewhat above the fray (at least for their fans). However, this does not seem to have caught on everywhere yet, as a recent decision from the UK shows.
Price fixing in a football context?
Last week, the UK “watchdog” (a.k.a. CMA – Competition and Markets Authority) announced that it had agreed with the Leicester City Football Club (also known as “the Foxes” and known to a broader public for their surprise win of the Premier League title in 2016) that Leicester will pay a maximum fine of GBP 880,000 for an anticompetitive agreement between Leicester and JD Sports, a sports-fashion retail company, concerning Leicester branded products, including the replica kit.
The agreement between Leicester and JD Sports lasted around three years and varied between seasons: For the 2018/2019 season, Leicester and JD Sports agreed that JD Sports would stop selling Leicester City-branded clothing online. For the 2019/2020 season, JD Sports agreed that it would not undercut Leicester City in online sales by applying a delivery charge to all orders of Leicester City-branded clothing (and thereby disapplying its company-wide promotional offer of free online delivery for all orders over GBP 70). This agreement was extended to the 2020/2021 season.
The CMA seems to feel with the football fans. Michael Grenfell, Executive Director of Enforcement at the CMA, said that “Football fans are well-known for their loyalty towards their teams. In this case we have provisionally found that Leicester City FC and JD Sports colluded to share out markets and fix prices – with the result that fans may have ended up paying more than they would otherwise have done”.
JD Sports applied for leniency at the CMA, which is why there will be no fines for JD Sports. Meanwhile, Leicester received a 20% discount on its fine for settling with the authority (note that this is twice as high as the usual 10% the European Commission grants for agreeing to settle a case).
The first half – Not the first price fixing case for JD Sports
In September 2022, the CMA found that JD Sports was involved in a similar conspiracy concerning price fixing of branded football clothing. In 2018, the Scottish football club Glasgow Rangers became concerned by the fact that JD Sports was undercutting the price for Ranger’s shirts sold online. The Rangers asked Elite Sports, which at the time was the manufacturer of Rangers-branded clothing and also sold Rangers-branded products directly through an online store, to sort out the problem.
Elite Sports and JD Sports reached a common understanding by which retail prices for Rangers-branded clothing products for the football seasons 2018/19 and 2019/20 were aligned, so that Rangers merchandise was not sold cheaper at JD Sports than at Elite Sports. The CMA imposed a fine of GBP 1.5 million on JD sports and a fine of GBP 459,000 on Elite Sports, already including a leniency reduction. As regards Rangers’ involvement, the CMA found that it was – at least to a certain extent – a participant in the horizontal arrangement despite not being active at the retail level of trade.
Warm-up – Yet another one?
Already in 2003, the Office for Fair Trading (the CMA’s predecessor “OFT”) found that several sportswear retailers, again including JD Sports, had engaged in price-fixing conduct by fixing the resale prices of – this time – Manchester United replica football kits. At the time, the infringing companies originally appealed the CMA’s decision to the Competition Appeal Tribunal, but the Tribunal dismissed their appeals, and the parties were ultimately fined a total of GBP 18.6 million. Paying another fine 20 years later for the same offense is not exactly ideal ….
Football is not above the law!
The cases show that football clubs should always play fair, also with regard to antitrust. This is true for the sale of merchandising articles, but also with regard to other topics, like competition over players.
However, the cases also show the importance of competition at the retail level. Particularly when consumers are committed to a specific product (as is the case with football fans), price competition only takes place at the retail level (which at the same time increases the incentive for collusion at this level). The cases also show very illustratively that anti-competitive agreements are possible and are also pursued by the authorities on many levels of the retail chain.
Co-author Carolin Goldbeck studied law in Freiburg and Linköping (and currently works at ROCAN as a trainee lawyer)
Photo by Janosch Diggelmann on Unsplash
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